Report on the state of packaging – March 2012

Quarterly packaging industry observatory. Situation at the
end March 2012 By Roccandrea Iascone - Istituto Italiano Imballaggio
 

 

Here is a glimpse of the performance of the manufacturing industry sectors where the level of packaging consumption is the most intense, divided into macro areas of food and non food, followed by the relative performance of the packaging industry. The performance of the manufacturing sectors is drawn from the sector analyses made by the professional associations or by Prometeia.
 
Food industry
(food and beverages)
During 2011 the Italian food industry showed a growth trend of 0.5% for food and 1.5% for beverages (this improved performance comes from a significant growth in exports).
Estimates made in late 2011 by the Federalimentare Research Centre regarding 2012 speak of a slight increase in production (+0.8% per year), a stable domestic consumption (+0.1%) and exports showing positive figures (+10% a year in value).
But Filippo Ferrua, president of the Confindustria member association declared: «Exports may not be enough to stay the stagnation of domestic markets and the increase in VAT will threaten the recovery of consumption in the short term».
 
Non-food
Pharmaceuticals. According to Prometeia’s projections this strategic manufacturing area ended 2011 with a slight fall in production caused mainly by a decline in exports, which account for 14-15% of output. Domestic demand has continued to show a slight growth rate, due to an aging population and due to a greater overall attention to health. Positive the forecasts for 2012 with a reconfirmation of the growth of domestic demand and the recovery of exports. The trends should return to the pre 2011 downturn rates.
 
Cosmetics and perfumery. According to Unipro estimates 2011 ended with an approx. 6% growth in production: a highly positive result at a time of generalized crisis of the manufacturing industry. This favourable performance is driven by the excellent result of exports (+19%). Domestic demand, although featuring a slowdown compared to 2010, has managed to show 1% growth. Moderately positive the expectations for 2012.
 
Fashion system. According to Prometeia, production in the area lost momentum during 2011, when set against figures for 2010 (that featured a significant recovery after several years of crisis). Unfortunately for 2012 a downturn is expected as a result of a slower growth in exports and a sharp drop in domestic demand.
 
Furniture and furnishings. In 2011 the furniture industry confirmed the negative trend that featured in the years 2009/2010 involving both domestic demand and exports.  2012 saw a slow recovery in exports, but due to a possible decline in domestic demand, activity should decline even further.
 
Chemical products. According to the periodical market analysis developed by Federchimica, in 2011 the chemical sector experienced a slow deterioration from September to October. The year should have ended (official figures are not yet available) with a growth in production of 1.5%, bolstered mainly by exports, which have however experienced a gradual slowdown since the autumn.
2012 should be somewhat hard going, with production down due to a sharp drop in domestic demand and a considerable slowdown in the growth in exports.
 
Mechanical engineering. During 2011 mechanical engineering continued the growth trends started in 2011 which involved both domestic and foreign demand. The year ended with an increase in production of about 4%. In 2012 the sector should still show positive trends, though lessened due to a possible drop in domestic demand.
 
Household appliances. In 2011 the market situation, already seen to be bleak in 2010, worsened even further. The crisis in this area not only stems from the bad overall economic situation, but also from the transfer of production facilities abroad: Obviously less production in Italy will also lead to a drop in exports. The situation will worsen in 2012.
 
Building materials: The situation continues to show more shade than light according to the analysis the construction industry trade association.
Over recent years the picture is one of a general drop in activity, things are liable to worsen in 2012.
The current crisis, both in terms of intensity and duration, is the worst in the last fifteen years. Building materials (concrete, rods for reinforced concrete, bricks, lime and chalk) are obviously heavily penalized. Tiles and   construction glass, by contrast, show a growth trend as a result of more extensive renovation work.
 

The economic picture
The fall in GDP of 0.7% in the fourth quarter of 2011 compared to the third quarter confirmed Italy’s entry into recession; the negative situation was confirmed in January 2012 with a contraction of 2.5%, a result significantly worse than that predicted by most economists.
This situation confirms the assumption that for the Italian economy 2012 will be a year of recession.
The deterioration of the labour market continues, with consequent increasing unemployment, compounded by rising inflation and the resulting reduction household purchasing power.

The re-adjustment of VAT scheduled in the autumn, together with the increase of IMU for second homes and its re-introduction for first homes will in all likelihood lead to a significant reduction in internal domestic consumption. The bad economic situation will be mitigated by the positive performance of exports in the food area (food and beverages) but also, in particular in the non-food area.
The negative economic situation also generally involves other European countries, with the exception of Germany.
In this context, the manufacturing industry, according to a preliminary assessment made by Prometeia, finished the year with an increase of 1.3%, mainly bolstered by exports.However, the progressive drop of the same seen from September onwards is worrying.
Prometeia estimates that a recessive trend should predominate throughout 2012. A recovery should set in in 2013.

The data used to compile the report is drawn from the Istituto Italiano Imballaggio database.